According to fresh analysis, the median employee in the UK would need half a century of income to reach the net worth of the richest 10% of the population.
Expanding Wealth Gap Across Decades
The study examined wealth distribution data covering the 2020-22 timeframe and determined that back in the mid-2000s, it would have needed 38 years of average worker salary to enter the wealthiest decile of the wealth distribution.
A research lead involved with the study commented: "Financial divides in Britain are presently so substantial that a regular employee accumulating their complete salary throughout their career would remain unable to attain the highest level of the wealth ladder."
Measuring the Wealth Divide
The study found that the disparity between the wealth of the typical individual and someone in the top 10% was one million pounds in 2006-08, but had increased to 1.3 million pounds in real terms by recent times.
The economist continued: "These differences are doubly concerning as financial progression in Britain is low – people that start life well-off tend to stay wealthy, and vice versa."
Relative Wealth Inequality
Although the economic divide growing in specific figures, the percentage of overall assets in the UK held by the richest households – termed "comparative financial divide" – has been "largely unchanged since the 1980s era," as stated in the study.
Throughout these years, overall assets in the UK surged from triple the annual GDP, to approximately 7.5x.
Drivers of Financial Divide
Termed "unearned" gains, via growing real estate costs and variations in pension valuations, were the primary factors of the growing financial disparity from 2010 onward, per the analysis.
These gains typically went to senior citizens with real estate, the research shows – worsening the age-based economic gap.
Generational Economic Gaps
The median economic difference between thirty-somethings and sixty-somethings increased over twofold in actual value, from £135,000 in 2006-08, to 310 thousand pounds.
Area-Based Disparities
Additionally, there were significant regional variations, with the average level of net worth in the pandemic period reaching 290 thousand pounds in the SE of England, where housing costs have tended to rise rapidly, versus £110k in the northeastern region.
COVID Era Effects
Throughout the COVID period, when millions of workers were supported by the public-funded employment protection, and pandemic lockdowns limited opportunities for spending, the data shows countless homes were in a position to set aside money, growing their net worth.
Wealthier families performed significantly better, however. "The average household in the lowest-income quintile saw their liquid savings increase by just £80 during the COVID years (from 2019 to 2022), approximately equivalent to the 24 months before COVID. On the other hand, the average household in the wealthiest fifth saw their available funds increase by £4,200," the study reveals.
